How to handle a business dispute

Contractors should already know that contrary to the wartime adage ‘Keep Calm and Carry On’ the best course of action when faced with a contract or business dispute is to ‘Keep Calm and DON’T Carry on,’ writes Nigel Musgrove, litigation solicitor at Cousins Business Law.

Of course, when there’s money and often reputation at stake that can be easier said than done. Following these five simple steps, in order, will help you effectively manage whatever dispute you encounter while optimising your chance of achieving an outcome that is favourable to you.

Step 1 - Identify your position

• Look at exactly what has happened and gather together all key documents such as any relevant contract, terms and conditions, correspondence and e-mails.
• Identify key personnel on your side of the argument who would be called upon to give evidence. Get written statements from them as soon as possible.
• Consider obtaining early expert evidence on any key points. Remember that getting legal advice at an early stage could dictate precisely how you handle the dispute to your best advantage later on. It will identify your legal position and your strengths and weaknesses.

Step 2 - Consider what result you want

Do you want to win? Of course you do, but what does a ‘win’ mean to you in your particular case? It might be that your position is strong and you want to fight now to head off future disputes. Or your most important objective may be to protect a lucrative business relationship and so the last thing you want is a heated dispute.

Generally it is better to approach dispute management in a commercial way to maximise your recovery or minimise your loss (taking into account risks, time, and costs).

Step 3 - Know your opponent and yourself

As well as knowing what you want, it is important to have a good idea of what your opponent wants. Do they want to fight the case? Do they have the money and time to do so? Can they afford to pay your costs if you win?

Equally important are the personalities involved. Who is the best person to handle the dispute for you? If you are getting agitated perhaps your judgment will be clouded and you should get help. It is important to be as objective as possible and avoid the complexities caused by strong personalities and prejudices.

Step 4 - Costs and benefits

You will need to know what the likely outcomes are in your case and how much it is going to cost. It is important to undertake a cost/benefit analysis. What is the likely timescale and cost of various options? Only with that answer can you really make a decision on strategy.

Step 5 - Plan your campaign

Once you have gathered all the above information and potentially taken legal advice on it, it is now time to plan your campaign. What tactics would be best to achieve the outcome you want? What methods do you want to use?
• Prepare your case thoroughly, identifying all the facts and key documents
• Do as much work as you can in setting out your case as soon as the dispute appears
• Prepare an action plan for the dispute
• Consider Alternative Dispute Resolution (ADR) rather than hotly pursue court proceedings
• Listen to your lawyer’s advice
• Be honest with your lawyer. Do not be unrealistic or hide any damaging evidence as you can be sure that your opponent will know your weaknesses.
• Carry out regular reviews of progress and any developments with evidence and objectives.

Thursday 24th January 2013